Economies in the regions covered by the EBRD have experienced many political and economic crises, but the scale and global effects of the coronavirus pandemic are unique. We are proposing a number of financial restructuring and insolvency policy initiatives for the EBRD regions to complement the emergency financial assistance provided by national governments and the international community.
Policy initiatives are divided into three main areas:
- Immediate initiatives to support new financing and co-financing by IFIs and national banks through secured transaction and insolvency reforms that ring-fence Covid-19 and other new financing
- Short-term initiatives to help SMEs through the challenging period of financial and operational distress caused by Covid-19 with advisory online information platforms and digitalisation support
- Medium to long-term initiatives to strengthen (pre)insolvency restructuring procedures and improve the efficiency of all insolvency and enforcement procedures for all stakeholders
Debt restructuring in a crisis
Given the global scale and protracted nature of the coronavirus crisis, many businesses around the world have experienced an interruption in economic activity that may continue into 2021. Many businesses will need to restructure both operationally and financially, while others may even cease to be viable. Ensuring this does not translate into insolvent liquidation procedures for a majority of businesses and further economic damage is a key priority for the EBRD.
In response to this, on 1 September 2020, the LTP launched an assessment aimed at providing detailed guidance on legislative gaps to address the expected increase in businesses needing to use formal restructuring procedures following the Covid-19 pandemic.
The survey will provide an up-to-date map of restructuring frameworks across the EBRD regions in Europe, Asia and Africa. It aims to provide an overview of the options within pre-insolvency and insolvency frameworks across the economies where the Bank engages.
Structured as a questionnaire, the assessment will be open for public consultation until 31 October 2020. It is available in English, French and Russian. For benchmarking purposes, the consultation is also open to countries where the EBRD does not invest. The results of the assessment as well as a report summarising its findings will be made publicly available online thereafter.
To maximise the effectiveness of the assessment, the EBRD is supported by the International Development Law Organization (IDLO), INSOL Europe, and INSOL International and is cooperating with the European Commission. The initiative aims to promote the implementation of the principles set out in the UNCITRAL Legislative Guide on Insolvency Law. The EBRD is also working closely with Investment Councils, which have been established with EBRD involvement in Albania, Armenia, Belarus, Georgia, Kosovo, Kyrgyz Republic, Moldova, Montenegro, Tajikistan, Tunisia, Ukraine and Uzbekistan, to reach as many stakeholders as possible and ensure public and private sector country discussions on the assessment are fully coordinated.
For more information on the assessment, please visit the microsite, available here.